United Overseas Bank Limited · SGX:U11
United Overseas Bank — Q3 2019 Earnings Presentation
25 slides from United Overseas Bank's earnings presentation, Nov 1, 2019
Slide 1: UOB Group Financial Highlights
UOB Group For the Nine Months / Third Quarter Ended 30 September 2019 Financial Highlights Lee Wai Fai Group Chief Financial Officer 1 November 2019 Disclaime r: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the pres
Slide 2: Financial Highlights
Financial Highlights Sustained Profits Steady return on equity at 11.9%; balance sheet stays sound • Total income for 9M19 up 10% to a new high of $7.60 billion, NPAT(9M19) led by broad-based loan growth and higher trading and investment income $3.34b 8% YoY • Healthy loan-to-deposit ratio at 89.3%;
Slide 3: Nine months earnings up 8% to new high of $3.34 billion
Nine months earnings up 8% to new high of $3.34 billion 9M19 9M18 YoY +/(-) $m $m $m % • Higher net interest income (NII) Net interest income 4,927 4,612 315 7 p lifted by healthy loan growth of 8%. Net fee income 1,557 1,500 57 4 p • Stronger trading and investment Others 1,114 789 325 41 p income
Slide 4: Third quarter earnings grew 8% from a year ago
Third quarter earnings grew 8% from a year ago 3Q19 3Q18 YoY +/(-) $m $m $m % • Higher NII driven by loan growth of Net interest income 1,687 1,599 87 5 p 8% YoY. Net fee income 551 484 67 14 p • Fees increased from wealth management flows, loan-related Others 371 244 127 52 p and credit card fees.
Slide 5: QoQ earnings 4% down as credit costs increased
QoQ earnings 4% down as credit costs increased 3Q19 2Q19 QoQ +/(-) $m $m $m % Net interest income 1,687 1,653 33 2 p • NII rose 2% from additional day count and asset growth. Net fee income 551 527 25 5 p • Higher fees driven by strong Others 371 403 (32) (8) q wealth management flows. Total income
Slide 6: Operating profit driven by stronger performance in Singapore while region remains broadly stable
Operating profit driven by stronger performance in Singapore while region remains broadly stable At 10% constant 10% FX rate 3% 7% 9M19 Operating 9M19 9M18 +/(-) +/(-) 59% 11% Profit $m $m % % Singapore 2,519 2,201 14 14 Regional: 1,301 1,283 1 1 10% Malaysia 479 493 (3) (1) 10% Thailand 295 297 (1)
Slide 7: All business segments delivered healthy profit growth
All business segments delivered healthy profit growth 6% 9M19 9M18 +/(-) 39% Segment Operating Profit $m $m % 9M19 Group Retail (GR) 1,639 1,535 7 55% Group Wholesale Banking (GWB) 2,346 2,255 4 4% Global Markets (GM) 253 175 44 -2% 40% Others * 4 (84) >100 9M18 58% Total 4,242 3,881 9 GR GWB GM Oth
Slide 8: QoQ NIM down 4 bps amid declining interest rates and a competitive pricing environment
QoQ NIM down 4 bps amid declining interest rates and a competitive pricing environment Net Interest Income (NII) and Margin 2.19% 2.18% 2.22% 2.19% 2.15% 2.16% 2.19% 2.18% 2.14% 2.17% 1.77% 1.82% 1.79% 1.84% 1.83% 1.81% 1.80% 1.79% 1.81% 1.77% 0.89% 0.94% 0.87% 0.90% 0.87% 0.81% 0.77% 0.77% 0.77% 0.
Slide 9: Steady fee growth, wealth management flows improved QoQ
Steady fee growth, wealth management flows improved QoQ Non-Interest Income 3,035 2,896 260 282 2,671 222 902 930 922 647 91 61 800 819 892 761 728 70 57 86 58 311 310 607 187 216 271 186 82 59 1,873 1,967 1,557 517 527 551 498 484 467 479 2017 2018 9M19 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2018 2019 Net Fee income
Slide 10: Cost/Income ratio maintained at 44.2%
Cost/Income ratio maintained at 44.2% Expenses and Cost / Income Ratio 43.7% 43.9% 44.2% 44.2% 43.6% 43.4% 44.4% 44.6% 43.7% 44.2% 4,003 3,739 1,129 1,154 3,356 1,073 1,022 1,011 1,556 987 984 1,515 446 455 1,314 413 381 403 384 387 2,447 2,224 2,042 660 675 708 606 619 626 597 2017 2018 9M19 1Q 2Q
Slide 11: Total credit costs for the quarter increased to 23 bps
Total credit costs for the quarter increased to 23 bps Total Allowances on Loans 22bp 23bp 61bp 18bp 19bp 21bp 16bp 17bp 20bp 12bp 13bp 28bp 11bp 15bp 15bp 15bp 13bp 660 11bp 11bp 8bp 390 337 160 131 122 113 81 65 55 2017 2018 9M19 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2018 2019 Total Allowances on Loans ($m) Allowa
Slide 12: NPL ratio flat at 1.5%
NPL ratio flat at 1.5% NPL ($m) 4,138 4,208 4,185 3,994 4,055 4,030 4,191 NPL Ratio 1.7% 1.7% 1.6% 1.5% 1.5% 1.5% 1.5% NPL ($m) 290 300 290 421 230 223 150 139 138 107 416 120 101 106 721 749 545 531 511 692 497 456 485 503 485 482 416 495 558 571 590 603 623 629 553 1,963 2,085 2,138 1,963 2,065 1,
Slide 13: Low NPA formation this quarter
Low NPA formation this quarter 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q $m $m $m $m $m $m $m NPAs at start of period 4,389 4,323 4,404 4,374 4,166 4,215 4,185 Group wholesale and small enterprises New NPAs _ 235 252 275 370 230 357 180 Upgrades, recoveries and translations (206) (88) (229) (257) (139) (182) (
Slide 14: NPA coverage remained adequate
NPA coverage remained adequate Total Allowances ($m) 3,913 3,935 3,935 3,636 3,732 3,523 3,687 1 NPA coverage (%) 91 89 90 87 89 84 85 1 Unsecured NPA coverage (%) 190 190 189 202 203 191 210 Total Allowances ($m) 2,048 2,029 2,088 1,978 1,935 1,998 1,937 1,991 1,944 1,984 47 105 49 1,651 1,684 1,59
Slide 15: Loan growth slowing in line with softening environment
Loan growth slowing in line with softening environment Sep-19 Sep-18 +/(-) Jun-19 +/(-) Gross Loans $b $b % $b % 39% Sep-19 Singapore 141 133 6 142 (0) 61% Regional: 105 95 10 101 4 Malaysia 29 29 2 29 2 Thailand 19 16 16 18 5 Indonesia 12 11 6 11 3 (1) China 45 39 15 43 5 42% Sep-18 Others 29 27 7
Slide 16: Deposits grew in tandem with loan growth
Deposits grew in tandem with loan growth Sep-19 Sep-18 +/(-) Jun-19 +/(-) 15% $b $b % $b % Customer Deposits 41% Sep-19 Singapore 199 197 1 203 (2) Regional: 82 75 10 79 4 44% Malaysia 31 30 2 30 1 Thailand 22 18 25 20 8 Indonesia 8 7 5 7 3 13% China (1) 22 20 11 21 3 42% Others 23 22 7 23 3 Sep-18
Slide 17: Stable liquidity position with average LCR at 144% and NSFR at 107%
Stable liquidity position with average LCR at 144% and NSFR at 107% Customer Loans and Deposits; LDR, LCR and NSFR 142% 142% 146% 147% 144% 128% 127% 86.7% 85.7% 85.7% 88.2% 86.6% 88.5% 89.3% 308 305 304 288 294 293 274 267 270 272 252 259 237 246 Mar Jun Sep Dec Mar Jun Sep 2018 2019 Net Customer L
Slide 18: Strong capital and leverage ratios
Strong capital and leverage ratios Capital Adequacy Ratios (CAR) and RoRWA 2.13% 2.02% 1.95% 1.99% 1.88% 1.92% 1.68% 18.8% 18.4% 17.4% 17.0% 17.0% 17.2% 16.9% 14.9% 14.5% 14.1% 13.9% 13.9% 13.9% 13.7% Mar Jun Sep Dec Mar Jun Sep 2018 2019 Tier 2 CAR Tier 1 CAR CET1 (%) RoRWA RWA ($b) 202 206 213 221
Slide 19: Appendix
Appendix : Performance of Major Territories - Singapore - Malaysia - Thailand - Indonesia - China Exposure to China
Slide 20: Singapore – Key Financials
Singapore – Key Financials 9M19 9M18 +/(-) 3Q19 2Q19 +/(-) $m $m % $m $m % Net interest income 2,855 2,631 9 968 970 (0) Net fee income 923 908 2 336 305 10 Other non-interest income 628 372 69 201 228 (12) Total income 4,406 3,911 13 1,505 1,503 0 Less: Expenses 1,887 1,710 10 635 645 (2) Operating
Slide 21: Malaysia – Key Financials
Malaysia – Key Financials 9M19 9M18 +/(-) 3Q19 2Q19 +/(-) RM'm RM'm % RM'm RM'm % Net interest income 1,648 1,635 1 564 538 5 Net fee income 440 450 (2) 171 141 21 Other non-interest income 315 265 19 110 104 6 Total income 2,403 2,350 2 845 783 8 Less: Expenses 949 880 8 327 320 2 Operating profit
Slide 22: Thailand – Key Financials
Thailand – Key Financials 9M19 9M18 +/(-) 3Q19 2Q19 +/(-) THB'm THB'm % THB'm THB'm % Net interest income 13,008 12,568 4 4,345 4,355 (0) Net fee income 3,933 3,655 8 1,395 1,299 7 Other non-interest income 1,069 802 33 397 361 10 Total income 18,010 17,025 6 6,137 6,015 2 Less: Expenses 11,256 9,90
Slide 23: Indonesia – Key Financials
Indonesia – Key Financials 9M19 9M18 +/(-) 3Q19 2Q19 +/(-) IDR'b IDR'b % IDR'b IDR'b % Net interest income 2,507 2,487 1 820 827 (1) Net fee income 617 576 7 228 196 16 Other non-interest income 627 393 60 249 198 26 Total income 3,751 3,456 9 1,297 1,221 6 Less: Expenses 2,650 2,349 13 930 866 7 Op
Slide 24: China – Key Financials
China¹ – Key Financials 9M19 9M18 +/(-) 3Q19 2Q19 +/(-) $m $m % $m $m % Net interest income 319 320 (0) 121 106 14 Net fee income 148 123 20 44 55 (20) Other non-interest income 250 215 16 70 95 (26) Total income 716 658 9 235 256 (8) Less: Expenses 296 273 9 105 99 7 Operating profit 420 387 9 129
Slide 25: Exposure to China
Exposure to China¹ 78.1 71.7 70.7 72.2 73.1 69.6 6.6 63.6 4.3 5.0 5.2 5.6 6.1 4.5 38.2 38.9 44.9 40.1 42.9 42.7 33.8 Debt ($b) Non Bank ($b) 29.2 25.3 26.8 24.3 23.7 24.3 26.6 Bank ($b) Mar Jun Sep Dec Mar Jun Sep 2018 2019 As at 30 Sep 2019: Mainland China exposure ($34b or 8% of total assets) Hong